The Cromulent Economics Blog

80 entries from January 2008

January 31, 2008

It happened on January 16th at 6:40pm Pacific Standard Time: Heraldo
Botelho, of Palo Alto, CA, purchased a flight offset for his upcoming
trip to visit his family in Brazil.

Weird. At the same time, 3:30pm Eastern Standard Time, I was 10 minutes into teaching my third class of the second day during the first week of the spring semester. The coincidence just, well, astounds me.

Duke Energy Corporation has received the final OK from state environmental regulators to build a coal-fired power generator in Western North Carolina.

Duke received its final air permit today, and company officials said they plan to begin construction immediately.

The generator is an upgrade to Duke Energy's Cliffside plant about 50 miles west of Charlotte. Construction is expected to take four years, and officials said it will create 1,600 new jobs with a total payroll of about $100 million.

The cost of the plant stands at $2.4 billion.

The project has been strongly opposed by environmental groups that said the generator will lead to more carbon dioxide emissions. They also accuse Duke Energy of not fully considering the use of renewable fuels, such as solar or wind power.

January 30, 2008

The City Council could vote as early as May on a plan to double the impact fees Raleigh imposes on new housing.... The
proposal put forward Tuesday would increase the open space and
transportation fees leveled on an average single-family home from
$1,200 to about $2,500. Fees would be tiered, meaning larger homes
would incur higher fees.

You can expect housing prices to rise by between $1920 and $4000 and land prices to fall by between $1200 and $2500.

NEW YORK (Jan. 30, 2008)—The Wall Street Journal Online (www.wsj.com) today launched a new blog called Environmental Capital that looks at how businesses and investors are navigating a new energy landscape shaped by growing environmental concern. The Environmental Capital blog is available for free at http://blogs.wsj.com/environmentalcapital.

Last year, our department did away with a second year qualifying exam for PhD students--faculty hated grading them and after two years in the program, no one ever failed--and instead put in a research competency requirement for second year PhD students. Here's a brief description of the requirements from our graduate school handbook:

Each student is required to complete a sole-authored research manuscript that meets high standards of scholarship and exposition. The manuscript must meet standards comparable to those used to evaluate contributed papers to major scholarly meetings though it does not have to be publishable quality. The manuscript may represent only a modest departure from published work, but it must be well conceived, justified, and communicated.

The appendix to the handbook--because all academic documents have appendices--contains a few more details about what is involved.

Yesterday, the current class of 2nd year PhD students asked me to meet with them and answer a simple question: "What the hell does that mean?"

So I've put together some answers to questions that came up in our meeting. First I will give you the handbook answer, then my interpretation. Hopefully a few of you out there will find them useful. I may add to these as I think of more. Feel free to pile on in the comments (or ask questions that I can answer).

Many of Canada provinces are pursuing a carbon-trading plan to fight climate change, saying on Tuesday it was inevitable the country would adopt a such system, even if the current federal government is cool to the idea.

British Columbia, Ontario, Quebec and Manitoba have been discussing adopting carbon trading, or emissions credit trading, in conjunction with the Western Climate Initiative (WCI) in the United States, an idea championed by California Gov. Arnold Schwarzenegger.

Establishing a broad scale carbon trading system is difficult. An effective system requires universal coverage, otherwise those not subject to the cap would receive what effectively amounts to a free input into production. That's why a federalist approach to carbon cap and trade is unlikely to be very successful. Case in point...

On
Jan. 15, President George W. Bush asked Saudi Arabia and the other
members of the Organization of the Petroleum Exporting Countries (OPEC)
to consider the effects of higher fuel costs to the United States
economy.

“A
few of the longer effects will eventually be that people will decide to
drive less or change their vehicles,” said Dr. John C. Whitehead, an
economics professor. “For the first time, last year the Toyota Prius
outsold the Ford Explorer.”

January 29, 2008

SUMMARY: Water-short California's search to satisfy its thirst is now focusing on a new source -- the Pacific Ocean. But the process of taking salt out of seawater faces criticism over its environmental toll and cost.

CLASSROOM APPLICATION: Desalination uses a lot of electricity, which makes desalinated water expensive and means that the process damages the environment. Furthermore, the article notes that the Metropolitan Water Agency, a Southern California water authority, will subsidize the consumption of desalinated water. The environmental issues and subsidizes lead to good questions about whether government authorities should subsidize the production of a commodity that damages the environment.

QUESTIONS: 1.) What is the opportunity cost, both private and social, of desalinated water?

2.) How will the increased supply of Southern California water affect the price of housing in this region?

3.) Should a government water authority subsidize the water desalination, a process that is environmentally damaging?

Rankings

"This blog aims to look at more of the microeconomic ideas that can be used toward environmental ends. Bringing to bear a large quantity of external sources and articles, this blog presents a clear vision of what economic environmentalism can be."

Don't believe what they're saying

And allow me a quick moment to gush: ... The env-econ.net blog was more or less a lifeline in that period of my life, as it was one of the few ways I stayed plugged into the env. econ scene. -- Anonymous

... the Environmental Economics blog ... is now the default homepage on my browser (but then again, I guess I am a wonk -- a word I learned on the E.E. blog). That is a very nice service to the profession.-- Anonymous

"... I try and read the blog everyday and have pointed it out to other faculty who have their students read it for class. It is truly one of the best things in the blogosphere."-- Anonymous